Can I Withdraw My Private Pension Before 55? | April 2024

The question, “Can I withdraw money from my pension before 55?” is common, especially among those contemplating early retirement or needing extra funds.

The following article is a guide that will provide information on the various aspects of private pension withdrawal.

Table of Contents

Understanding Private Pension Withdrawal Before 55

In the UK, the majority of private pension schemes prevent the withdrawal of money before age 55, such as personal and workplace pensions. Consequently, there are few exceptions to this.  

Withdrawing pension savings early should be carefully considered, because it is not always the best financial decision for you.

Remember, although you can access your pension, it doesn’t mean you have to. 

Understanding the implications of withdrawing your pension early can help you to make an informed choice. Making the decision to withdraw your money before the age of 55 is important. 

It’s always advisable to seek financial advice before making such a decision, as it may impact your financial stability in your later years.

While there are certain benefits to accessing your pension savings early, there are also downsides to keep in mind. 

For example, your pension pot may not last as long as you need it to if you start taking money out too soon. 

This is especially relevant, considering life expectancy in the UK is continually increasing. This means that you might need your money to stretch for a longer amount of time.

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Legal Age for Private Pension Withdrawal

The minimum legal age to withdraw private pensions in the UK is currently 55. This contrasts the state pension age, which is 66 and rising. It is important to note that there are very few exceptions where private pensions can be withdrawn earlier than 55.

The minimum age for private pension withdrawal is set by UK law, making it important to stick to this age to avoid potential tax charges. 

If you take your pension before the minimum age, you could face a tax charge of up to 50% on the amount drawn. This is because it could be considered an unauthorised payment. 

There are exceptions to the legal age pension withdrawal age for those with private pensions. 

For instance, those who have a serious medical condition or are in certain professions, you may be allowed to take your pension earlier. Again, it’s definitely worth checking the specific rules of your pension scheme.

For many, early retirement is an attractive prospect. However, you’ll have to consider that the earlier you retire, the less time you have to build up your pension pot. 

You’ll also have to make your pension savings stretch for a longer period, potentially affecting your retirement lifestyle.

Exceptions to the Age 55 Rule 

Although there are few exceptions which allow private pension withdrawal before 55, some  include:

  • Severe illness with a life expectancy of less than one year
  • Specific professions with earlier retirement ages
  • Specific older pension schemes which were established before 2006

Even in these cases, remember that early withdrawal could potentially carry tax penalties or other issues.

If you’re diagnosed with a serious medical condition that reduces your life expectancy to less than a year, you may be allowed to take your whole pension pot out as a tax-free lump sum. 

This is often referred to as the serious illness clause. The exact conditions and rules to qualify for this can vary between different pension providers, meaning that you’ll need to check your specific scheme’s terms.

Certain professions have a lower normal minimum pension age, such as professional athletes or members of the armed forces. 

If you’re in one of these professions, you should consult with your pension provider to understand your options, as they acknowledge these professions have a shorter working life. 

It’s also worth noting that some older pension schemes may allow you to take your pension before 55. These are typically workplace pensions that were set up before 6 April 2006. It is necessary to contact your pension provider if you think this applies to you. 

Another exception is if you have lost track of a pension. In this instance, your employer might be able to tell you who to contact to find out if you can access your pension early. Conversely, this option should be considered carefully as it may come with tax implications.

Understanding Private Pension Withdrawal Before 55

Tax Implications of Early Pension Withdrawal

Withdrawing your pension early can have significant tax implications. 

Therefore, you can face a significant tax bill when withdrawing pension funds early. According to current HMRC rules, withdrawing a pension early increases tax exposure. This includes up to a 55% unauthorised payment charge

It’s important to note that the tax implications not only affect the money you withdraw but also any future pension savings. 

The annual allowance for pension contributions can drop significantly once you start withdrawing money, potentially limiting your ability to rebuild your pension pot.

If you withdraw your pension before the legal minimum age without a valid reason, you could face an unauthorised payment charge. This is a tax charge of up to 55% on the amount you take out, making early withdrawal a costly decision.

Sometimes, scammers may encourage you to withdraw your pension early, promising to help you avoid tax. 

These scams are often referred to as “pension liberation” or “pension unlocking” scams and are illegal. They could leave you with a large tax bill and a significantly reduced pension pot.

"In the UK, the majority of private pension schemes prevent the withdrawal of money before age 55, such as personal and workplace pensions."

Impact on Pension Pot Size

As we know, withdrawing your pension early will inevitably reduce the size of your pension pot. The earlier you start taking money out, the less you’ll have left when you reach your state pension age. This can have a significant impact on your lifestyle during retirement.

When you take money out of your pension pot, it’s not just the amount you withdraw that you lose. You also lose any potential growth on that money through interest. Over time, this can seriously impact the overall size of your pension pot.

If you take a large lump sum from your pension pot, you might be reducing the amount you could contribute in the future. 

In most cases, once you start taking money from your pension pot, the annual allowance for how much you can pay into your pension drops from £40,000 to £10,000.

The size of your pension pot can also be affected by charges from your pension provider for early withdrawal. 

These charges can be quite substantial, making it essential to understand them before withdrawing your pension early. This provides you with the best opportunity to avoid these charges.

Alternatives to Early Pension Withdrawal

If you’re considering withdrawing your pension early because you are experiencing financial difficulties, there are other options available. 

For instance, you could consider releasing equity from your home, downsizing, or restructuring your debts.

If you’re struggling with debt, you may be able to get help from a debt advice service. They can provide free, confidential advice and help you to understand your potential options. Make sure you explore all alternatives before deciding to withdraw your pension early.

Navigating Serious Illness 

If diagnosed with a serious illness and life expectancy under 12 months, you may qualify to withdraw the entire pension pot tax-free. Conversely, conditions apply to surrounding factors such as age and prior withdrawals. 

Remember that verifying eligibility with your provider is crucial, as rules vary depending on the pension scheme.

Taking your pension as a lump sum in the event of serious illness can provide you with financial security. However, it’s crucial to understand the potential tax implications. 

As mentioned previously, whilst the first 25% of the lump sum is typically tax-free, the rest is often taxable.

It’s also important to consider how taking your pension as a lump sum could affect any benefits you’re entitled to. Some benefits are means-tested, meaning that they consider your income and savings. 

This will include any lump sum you receive from your pension, which could disqualify you from benefits depending on how much money you receive. 

Early Retirement and Your Pension

Retirement age is a personal decision and will depend on various factors, including your health, financial situation, and lifestyle goals. Consequently, you should consider these factors carefully when planning your retirement. 

If you’re considering early retirement, seeking financial advice is often a good idea. A financial adviser can help you to understand your options, providing a plan to ensure that your pension savings will provide for you throughout your retirement.

It might be useful to remember that whilst you can start taking money out of your pension from the age of 55, you don’t actually have to retire. 

Many people choose to continue working, whilst also drawing money from their pension. This can provide additional income, allowing you to build up your pension pot for longer.

Tax Implications of Early Pension Withdrawal

Financial Advice for Pension Planning

Seeking professional financial advice can be beneficial, given the complexities of pension planning. A financial adviser can help you to understand your pension scheme, the implications of early withdrawal, and your options for retirement income.

Financial advisers can help you to plan for retirement, whilst also taking your financial situation, lifestyle goals, and life expectancy into account. 

They can also help you to understand the tax implications of your decisions, provide guidance on avoiding pension scams, and support you to prepare accordingly. 

It’s important to choose a financial adviser that is authorised and regulated by the Financial Conduct Authority (FCA). This is because it ensures that they meet certain standards and that you can receive compensation or protection if things go wrong.

Financial advice isn’t just for those nearing retirement. The earlier you start planning for your retirement, the longer you have to build up your pension pot and make informed decisions about your future.

Changing Pension Rules in the UK

The rules around pensions in the UK have changed significantly in recent years. More pension freedoms were introduced in 2015, offering people more flexibility in accessing their pension savings. 

However, they also increased the complexity and potential pitfalls for users trying to access their pensions. 

In 2028, the minimum age for private pension withdrawal is set to increase from 55 to 57 years of age. This is in line with increases in the state pension age and life expectancy, affecting those who are planning to retire early and access their pension savings.

The government is also in the process of introducing a new pension scheme called a Collective Defined Contribution (CDC) scheme. These schemes pool members’ contributions together and provide a more predictable income in retirement.

Unfortunately, pension scams have also been observed to be on the rise in recent years. This is why it is necessary to be aware of these scams and know how to avoid them.

The changing pension landscape means it is important to stay informed and seek professional advice when needed. Your pension is one of your most important assets, and understanding how to manage it effectively can help to ensure a comfortable retirement.

Impact on Pension Pot Size

The Process of Withdrawing Money from Your Pension

There are some steps you must follow when withdrawing money from your private pension. First, contact your pension provider to inform them of your decision. They will provide you with necessary forms, whilst also guiding you through the beginning of the process. 

The amount you can withdraw is dependent on the rules of your pension scheme. Usually, you can take 25% of your pension pot as a tax-free lump sum. Although the rest will provide your retirement income, it will also be subject to income tax.

As we know, making withdrawals will reduce your pension pot. This could impact your financial security for later life, particularly if you live longer than expected. Planning these withdrawals carefully is crucial to ensure that your pension pot lasts as long as you need it to.

Ill Health Retirement and Private Pensions

If you’re unable to work due to poor health, you may be eligible to take ill health retirement. This allows you to access your workplace pension or personal pension before you reach state pension age of withdrawal. 

The specific rules for ill health retirement will vary depending on your pension scheme. Whilst some schemes may pay out a larger pension if you’re seriously ill, others may allow you to take your whole pension pot as a lump sum.

Ill health retirement can provide financial support when you need it most. However, there are implications which you should understand, including potential tax charges. That’s why It’s typically advised to seek financial advice before making this decision.

Understanding National Insurance and Your Pension

National insurance contributions play a key role in eligibility for state and workplace pensions. For example, you need at least ten qualifying years on your national insurance record to receive any state pension. 

Alternatively, for the full state pension, you’ll need 35 qualifying years on your national insurance.

If you continue working while drawing your pension, you may need to continue paying national insurance. However, this is dependent on your income. For instance, If you earn more than the lower earnings limit, you’ll have to pay national insurance.

Understanding how national insurance affects your pension is vital, If you’re unsure, your employer or pension provider can provide information. Alternatively, you can contact HM Revenue and Customs (HMRC) for advice.

Avoiding Pension Scams and Unauthorised Pension Releases

Unfortunately, pension scams are becoming increasingly more common. These scams often involve appealing offers to help people access their pension pots before 55, known as pension release. 

They have also been known to offer unusual or high-risk investment opportunities.

Remember, if an offer seems too good to be true, it probably is. Pension release before 55 is typically only possible in specific circumstances, such as severe ill health. Otherwise, it’s likely to result in a hefty tax charge. 

Please be wary if you’re contacted about your pension by someone you don’t know. It is important to never give out personal or financial information to unsolicited callers. If unsure, remember to contact your pension provider or the Pensions Advisory Service for guidance.


1. Can I withdraw my pension as a tax-free lump sum?

Yes, typically, you can withdraw the first 25% of your pension fund as a tax-free lump sum (once you reach the minimum pension age, which is currently 55 in the UK). However, the remaining 75% will be subject to income tax. 

Remember, If you withdraw large amounts from your pension pot, it could push you into a higher tax bracket. Therefore, this would lead to a larger tax bill.

2. What happens if I decide to take my state pension early?

It’s important to note that unlike private pensions, you cannot take your state pension early. The government sets the state pension age and it is currently 66 years old, and is due to further increase in the future too. 

Claiming your state pension is optional, meaning that you have to apply for it. When you are approaching the state pension age, your employer or the Pension Service will notify you with instructions on how you can claim. 

3. What should I do if I suspect a pension scam?

If you suspect a pension scam, it’s crucial to act quickly. Remember to not give out any personal or financial information, and don’t sign any documents. 

You should contact your pension provider immediately and report the scam to Action Fraud. As discussed previously, pension scams can take many forms. 

These include offers to help you access your pension before 55, or promises of unusually high returns on pension investments, so be wary. 

4. How much money can I realistically afford to withdraw from my pension?

The amount of money you can afford to withdraw from your pension pot depends on various factors, such as the size of your pension pot, your living costs, and how long you expect to live. Furthermore, remember to consider any potential tax implications. 

It is important to note that a financial adviser can help you to work out a realistic withdrawal strategy. Once you start taking money from your pension pot, it can impact the maximum amount you can contribute.

5. What should I do if my employer says I can start claiming money from a private pension?

If your employer tells you that you can start claiming money from a private pension, it’s important that you also verify that information. 

You can do so by checking the rules of your pension scheme and considering seeking financial advice. This is crucial as it could face unauthorised payments tax, which can have a substantial financial impact.

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William Jackson

William is a leading writer for our site, specialising in both finance and health sectors.

With a keen analytical mind and an ability to break down complex topics, William delivers content that is both deeply informative and accessible. His dual expertise in finance and health allows him to provide a holistic perspective on topics, bridging the gap between numbers and wellbeing. As a trusted voice on the UK Care Guide site, William’s articles not only educate but inspire readers to make informed decisions in both their financial and health journeys. 

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